The 74-year-old was convicted in 1996 of the 'backpacker murders' of seven people, and is currently serving seven consecutive life sentences, as well as 18 years without parole at Goulburn Correctional Centre.

According to ABC News, Milat was admitted to hospital for tests for possible organ failure linked to extreme weight loss.

Instead the serial killer was diagnosed with terminal cancer, and is unlikely to return to the supermax jail.

He will likely be transferred to Long Bay Jail Hospital in Sydney's south.

Milat remains chained to his hospital bed in the ward for inmates, with at least two prison officers guarding his room and providing 24-hour surveillance.